Going gets tough in poultrymeat market

Demand for chickenmeat is continuing to grow, but largely off the back of aggressive price promotion by retailers.

Addressing the recent South West Chicken Association conference in Devon, Andrew Maunder from 2 Sisters Food Group said the overall food market had changed dramatically since Christmas. “Pre-Christmas, people thought the public had adjusted to the recession and settled, but there has been a sea-change since then.”

Food sales dropped by 2.2% in February, compared with last year, and 35% of British consumers had cut back on food in an attempt to save money, with 47% reducing purchases of meat.

“The good news is that chicken is still in growth, rising by 3.7% in the year to 20 March – but a lot of that has been driven by deep cut promotions.” Organic sales had fallen by 7%, and free-range by 3%, while corn-fed chicken sales increased by 14%. “It is clear that where you can find ways to add consumer value, they will pay for it.”

Discounters and top-end retailers were performing better than the likes of Tesco, with Waitrose’s stake in the market rising by 8.4% in the year to 20 February, said Mr Maunder. “Consumers’ core values are still there – they want high welfare products from British farmers; the problem is that they only want that on special occasions. They are treating themselves more at home, but in between they are shopping around for the cheapest deals.”

Sainsbury’s share value had dropped by 13% over the past month, and Tesco had cut its prices by 2.8% in March, to combat Asda’s price promise deal. “Retailers are fighting not to lose their customers, and when they fight, they use our products,” said Mr Maunder. “At a time when production costs are increasing, we must not be the ones who suffer. But we cannot pass on all our costs, even if the retailers were to let us, as consumers would simply change their shopping habits.”